Ohio BWC Created Illegal Preferred Risk Groups
Ohio BWC insureds file a huge lawsuit. Business owners will try to convince a judge that Ohio plays favorites with some companies by offering unfair discounts in money they must pay to the state’s fund for injured workers.

Attorneys representing several businesses, including a sandwich shop and a copper tube manufacturing firm, plan to ask a Cuyahoga County judge on Tuesday to bar the BWC using the rate-setting system.
Bureau officials say recent changes they made to the system will improve the fairness of the rate-setting system to make Ohio attractive to business investment.
At issue is the bureau’s practice of offering discounts of up to 90 percent – and 85 percent next year – for business groups with records of workplace safety. The lawsuit contends that businesses outside such groups are subsidizing the injured-worker system.
The lawsuit could affect 85,000 businesses that pay non-group rates. The lawsuit claims such non-group employees pay more than $200 million to subsidize 98,000 group-rated employees.

An example of the premium overcharging by the Ohio BWC of a doughnut business of 35 years:
- Paying $800 yearly to insure four full-time employees and nine part-timers
- Two injury claims five years ago involving falls on wet floors. One was minor and one required surgery.
- The two claims caused the Workers Comp premium to rise to $10,000 as the company was removed from the preferred groups.
- That is a 1,250% increase in premiums!
The lawsuit contends the bureau tries to anticipate what will happen in the coming year when setting rates rather than following the law and applying the workplace experience of the past year to premiums.

James Barnes, the agency’s chief legal officer, said the bureau has worked over the past year to refine rate-setting. “These steps are part of a deliberate and comprehensive effort to make rates and premiums even fairer and more accurate for all employers,” he said in a statement.
Prior to the December decision to cut discounts, the bureau acknowledged that the set-up it had in place was handsomely rewarding groups of businesses with spotless safety records that banded together into coalitions or associations, but hurt companies that experienced even one serious accident.
A third of the 6,800 businesses that lost their group rating in 2006 because of a serious accident or death involving an employee either stopped paying insurance or filed for bankruptcy, according to the bureau.
Stuart Garson, an attorney for the companies challenging the workers’ comp bureau, said the agency had the right to take safety records into consideration in setting premiums, but said its rate-setting formula wasn’t fair to all employers.
BWC handled nearly 172,000 job-injury claims last year, including 176 work-related deaths, and about 10 percent of claims were dismissed. In 2006 it paid out more than $1.9 billion in benefits and collected more than $2.1 billion from employers.
Next Up – What is the Real Problem Here? I have posted it numerous times. Coming Soon – I will see how the Ohio BWC formulas compare to other states.
©J&L Risk Management Inc Copyright Notice